Toyota is working with Microsoft to develop new IT-based services for electric and hybrid plug-in cars, such as applications that let owners remotely tell their vehicles when to recharge. The companies are putting about $12 million into a Toyota subsidiary, called Toyota Media Service Co., to develop apps and data services on the Microsoft Azure cloud platform and deliver them to Toyota vehicles via telematics.
What matters for now about this deal isn't the specific apps that Toyota President Akio Toyoda and Microsoft CEO Steve Ballmer described in announcing the deal Wednesday. Those ideas are sketchy, and a bit underwhelming, at this early stage of the partnership, which the two only started discussing in January.
No, what matters for most IT pros is what this deal represents about the future of IT. The deal is one more piece of evidence for IT leaders that they must look at their companies’ products, whatever those products are, and ask: "How does IT fit into them in a new way? What can we do now--with mobile data, cloud computing, social networks--that we couldn't before?"
Toyota and Microsoft clearly consider this to be a huge deal, as seen by the fact that Toyoda joined Ballmer in Redmond, Wash., for the announcement. Toyoda shared the doubts he had about whether it was appropriate for him to leave Japan for a public appearance in the wake of his country’s tsunami disaster. He concluded the best thing he could do was to "provide hope and steady economic progress for the future."
The actual applications the two men sketched out won't send anyone scrambling for the showrooms. This wasn't a product demo. They talked in the most general terms about future apps, like those to control and monitor vehicle charging, GPS-enabled apps, apps, and even perhaps apps that let drivers turn the lights on or heat up at home before they arrive. "We will boost the value of automobiles by making them 'information terminals,'" Toyoda said.
Toyoda and Ballmer expect the first apps to be available in 2012, when Toyota comes out with electric vehicles and plug-in hybrids. A lot of what they discussed centered on the unique power needs of those vehicles. Ballmer talked about a car connected to a smart electricity grid knowing to charge up when rates dip overnight as usage falls, something Toyoda called a "new link between vehicles and people and smart center energy management systems.”
Why focus on electric cars for this new venture, when that’s such a small market at this point? That was Toyota's decision, as it sees the need for new tools to manage charging. Ballmer also said that's the place where they can do something new. "You have to shoot ahead of what the customer thinks they're interested in today," he said. "There are all kinds of ways to redo yesterday's vehicles and IT technologies, but yet if you think of tomorrow and the next day's No. 1 challenge that is unique to the mobile environments, it certainly has to do with the use of power and electricity in the next generation of vehicle."
General Motors is coming out with its own electric car, the Volt, this year, and it has smartphones apps that it says will offer some of the features Toyoda and Ballmer described, such as managing charging and remotely turning on the heat or air conditioning. BMW also said it's creating a $100 million venture fund to invest in mobile apps, tying that effort to the company's new BMWi brand under which it plans to build electric cars.
But while charging-related apps are the first target, Ballmer said "you may well see applications that go beyond that with the launch of the first applications in 2012."
And that's where Microsoft Azure cloud platform comes in in a big way.